Even though Arctic Glacier, the Winnipeg packaged-ice company, was purchased out of creditor protection more than five months ago, the windup of the company's affairs is a long way from being completed.

Late last month, the court-appointed monitor asked for and received an extension of its stay of proceedings to March 15, 2013.

The extension of the windup -- something one stakeholder referred to as "the never-ending receivership" -- has a lot to do with the fact that the monitor still has a lot of money left to disburse after the secured creditors were paid off.

When all the accounts were settled after the completion of the $434-million purchase by the Miami private equity firm H.I.G. Capital, the monitor is left with $131.7 million to distribute to creditors of the old Arctic Glacier.

And claimants -- from the U.S. Department of Justice to a consumer group seeking $463 million -- will be keeping the receiver busy for several more months as the fight over the spoils rages on from Winnipeg to San Francisco.

All the while, shares of the company, which not so many years ago traded for as much as $14, continue to have a market, trading at about 25 cents.

Investors are still buying and selling the shares because even with the millions of legal settlements and valid creditor claims, the monitor noted as recently as its Nov. 30 report to the court that "there may be sufficient funds to permit a distribution to AGIF's (Arctic Glacier Income Fund's) unitholders."

Unitholders are betting there will be about $87.5 million left.

The deadline for creditor claims was Oct. 31 and now the monitor must conduct a review of the claims.

The bad news for some is all the claims are not likely to be satisfied in full.

There is a claim for $463 million being made by a class action of indirect purchasers, arising out of the antitrust activities to which Arctic Glacier pleaded guilty and were the root of the firm's demise into indebtedness and, ultimately, insolvency.

In a presentation to potential new bond investors shortly after the close of the H.I.G. deal, Arctic CEO Keith McMahon said the antitrust debacle ended up costing the company about $110 million, including $40 million in legal fees and settlement costs, $40 million in additional financing costs (that it would not have had to bear if the company weren't operating under a cloud of uncertainty) and another $30 million in costs related to a protracted attempt to sell the company.

The company agreed to pay a fine of $9 million to the U.S. Department of Justice and also settled a class action with U.S. retailers for $12.5 million and with Canadian retailers for $2 million.

The monitor still has to pay $7 million to the DOJ, $10 million to the U.S. direct purchasers and $2 million to the Canadian retail claimants.

But the monitor has made it clear it intends to dispute the massive indirect-purchaser claim.

In its most recent report to the court, the monitor said it "has been informed that Reddy Ice (a U.S. packaged-ice company involved in the antitrust matter) settled its potential liability under the indirect-purchaser litigation for $700,000 and that Home City (another U.S. packaged-ice company) provisionally settled its potential liability under the indirect-purchaser litigation for $2.7 million."

While it does not seem unreasonable to be disputing what seems like a cash grab, the receiver is also disputing a claim from Robert Nagy, the founder of the company back in the late 1980s.

When Arctic made a large purchase of a group of companies in California at the end of 2006, Nagy, who was on the board at the time, took ownership of a production facility in Arizona to help Arctic make the acquisition. The company leased it back from Nagy's company with the understanding it would buy the facility from him for $12.5 million.

The lease agreement had a trigger clause to buy it back from Nagy if there was a change of control of the company.

It's the same kind of trigger clause that has produced creditor claims for close to $13 million from current and former board members and management for "change-of-control bonuses."

Some of those claimants are still employed by the new owners and drawing their regular salaries.

There is no guarantee they will be successful in those claims, but Nagy's claim is in the midst of intense legal debate.

It would be sad if the founder of the company, who staked the company to its foundation in the first place, was to lose his claim while those who managed it into bankruptcy receive generous payouts.

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash

martin.cash@freepress.mb.ca

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